Outsourcing payroll responsibilities can be a sound business practice, however ... Know your tax duties as an employer

Many employers outsource some or all their payroll and related tax responsibilities to third-party payroll service companies. Third-party payroll company can simplify company operations and assist satisfy filing deadlines and deposit requirements. Some of the services they supply are:

- Administering payroll and work taxes on behalf of the company where the employer provides the funds initially to the third-party.

• Reporting, collecting and transferring employment taxes with state and federal authorities.
  
  Employers who outsource some or all their payroll responsibilities must consider the following:
  
  - The company is eventually responsible for the deposit and payment of federal tax liabilities. Despite the fact that the company may forward the tax amounts to the third-party to make the tax deposits, the company is the accountable celebration. If the third-party fails to make the federal tax payments, then the IRS might examine penalties and interest on the employer's account. The employer is accountable for all taxes, charges and interest due. The company may also be held personally liable for specific unpaid federal taxes.
• If there are any problems with an account, then the IRS will send correspondence to the company at the address of record. The IRS highly suggests that the employer does not change their address of record to that of the payroll service provider as it might substantially restrict the employer's capability to be informed of tax matters involving their company.
• Electronic Funds Transfer (EFT) must be used to transfer all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers must guarantee their payroll providers are utilizing EFTPS, so the employers can confirm that payments are being made on their behalf. Employers should register on the EFTPS system to get their own PIN and utilize this PIN to occasionally validate payments. A warning needs to increase the first time a service company misses a payment or makes a late payment. When an employer registers on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS allows companies to make any additional tax payments that their third-party provider is not making on their behalf such as estimated tax payments. There have been of individuals and companies, who acting under the appearance of a payroll company, have actually taken funds intended for payment of work taxes.
  
  EFTPS is a safe and secure, precise, and easy to use service that offers an immediate verification for each deal. This service is provided complimentary of charge from the U.S. Department of Treasury and allows companies to make and verify federal tax payments digitally 24 hours a day, 7 days a week through the internet or by phone. For more information, companies can enroll online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for a registration type or to talk with a customer support representative.
  
  Remember, companies are eventually accountable for the payment of earnings tax withheld and of both the employer and staff member parts of social security and Medicare taxes.
  
  Employers who believe that a costs or notice received is an outcome of a problem with their payroll service supplier must contact the IRS as quickly as possible by calling the number on the costs, writing to the IRS workplace that sent out the bill, calling 800-829-4933 or going to a local IRS workplace. For more details about IRS notices, costs and payment choices, refer to Publication 594, The IRS Collection Process PDF.